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Price Dispersion, Search Externalities, and the Digital Divide

Nermuth, M and Pasini, G and Pin, P and Weidenholzer, S (2009) Price Dispersion, Search Externalities, and the Digital Divide. UNSPECIFIED. University of Vienna Economics Papers 0916.

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Abstract

We propose a model of price competition where consumers exogenously differ in the number of prices they compare. Our model can be interpreted either as a non?sequential search model or as a network model of price competition. We show that i) if consumers who previously just sampled one firm start to compare more prices all types of consumers will expect to pay a lower price and ii) if consumers who already sampled more than one price sample (even) more prices then there exists a threshold ?the digital divide? such that all consumers comparing fewer prices than this threshold will expect to pay a higher price whereas all consumers comparing more prices will expect to pay a lower price than before.

Item Type: Monograph (UNSPECIFIED)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 27 Jun 2012 15:11
Last Modified: 17 Aug 2017 18:12
URI: http://repository.essex.ac.uk/id/eprint/2633

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